This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number

28335

Company name

Cleantech Innovation Facility

Country

World Region

Sector

Other

Environmental category

FI

Date SPI disclosed

July 29, 2011

Projected board date

September 1, 2011

Department

Status

Active

Previous Events

Signed: August 6, 2012
Approved: October 13, 2011

Overview

Project description

The proposal is to create the Cleantech Innovation Facility (CTIF), a $60 million delegated authority facility which would include up to $15 million of concessional funding to invest equity or quasi-equity in early stage Cleantech companies. The CTIF will extend IFC’s reach to a group of innovative Cleantech companies (companies producing goods or services which deliver GHG emission avoidance) that have strong potential development impact in terms of environmental and social benefits, while also targeting IDA countries and/or Bottom of the Pyramid markets.

The CTIF will target companies that are innovative in terms of technology or business models across a broad spectrum of sectors, including clean energy, transportation, water, waste, building and energy efficiency, and will contribute towards GHG emission avoidance and increased access to modern, healthy energy and water services, among others.

Sponsor/Cost/Location

Project sponsor and major shareholders of project company

The project will be co-sponsored by the IFC and the IFC-GEF Earth Fund. The IFC-GEF Earth Fund is the first operational platform under the GEF Earth Fund and comprises $10 million contributed by IFC and $30 million contributed by the Global Environment Facility (GEF). The mandate of the IFC-GEF Earth Fund is to support, via advisory services and concessional finance, market transformation through testing or scaling up new technologies, new business models, or financial mechanisms which mitigate climate change or preserve biodiversity.

Private sector innovation often arises through small, young companies and this type of companies will predominate in the CTIF portfolio, which will also aim to be geographically diverse.

Total project cost and amount and nature of IFC's investment

The CTIF would be comprised of up to $45 million for IFC’s own account, and up to $15 million of concessional funding from the IFC-GEF Earth Fund. The CTIF will invest equity or quasi-equity in about 15 small Cleantech projects of earlier stage than “business as usual” at IFC. Blending concessional funds into the CTIF will partially mitigate the financial risks associated with this kind of investing and will therefore allow IFC to invest in earlier stage and more innovative Cleantech companies than it does today.

CTIF investments will fund project costs such as capital equipment, land, working capital and operating expenses for companies which have not yet reached profitability.

IFC investment as approved by Board

45 million (USD)

Product Line

IFC Investment (million USD)

Risk Management

Guarantee

Loan

Equity

45

* These investment figures are indicative

Location of project and description of site

This is a global facility. Investments may focus on any Part 2 country, most transactions will focus on IDA countries and frontier regions.

Development Impact

Anticipated development impact of the project

Impacts will vary investment by investment but tax receipts, job creation, and GHG emission avoidance will be indicators for all investments. Other impacts may include increased access to water and energy for the underserved, recycling leading to reduced pressure on landfills, and technology transfer from the North to the South and from South to South. Both directly and via demonstration effects, the CTIF aims to bring more capital and talent to Cleantech in development countries, and aims to support innovation in technology and business models.

IFC's expected development contribution

The Facility will enhance IFC’s additionality by allowing IFC to work with companies in which normally IFC would not be able to invest, and for whom few, if any, other sources of finance are available. These companies will benefit from the IFC stamp of approval in terms of access to finance and possibly access to markets. IFC may also introduce some companies to potential partners within IFC’s network both on the investment and advisory services side of IFC’s business. In this way, IFC will assist companies’ expansion in new markets and companies’ access to investors.

Environmental and social issues - Category FI

Each proposed investment within the CTIF will undergo environmental and social appraisal, and is expected to involve environmental and social risk at a level between minimal and limited, in this facility classified as Category FI according to IFC’s Environmental and Social Review Procedure. Depending on the level of environmental and social risk in each investment, a classification of Category C or Category B is expected for individual CTIF investments. IFC will review all projects’ environmental and social performance from appraisal through supervision as needed. Where a project is Category B, IFC will publicly disclose an Environmental and Social Review Summary.

The Facility is expected to yield strong environmental and social benefits, particularly in terms of GHG emission avoidance. As investments will be in early stage companies, they are expected more frequently than mainstream investments to have IFC provide guidance on establishing environmental and social management systems to comply with IFC Performance Standards.